Arcus 0 Report post Posted October 20, 2003 I saw a post on another board about using a straight option with a clause giving the optionee the right to lease purchase the property to a t/b and then assign the agreement back to the seller. The optionee would have no risk because he would not be in a "sandwich" lease, the seller got debt relief, the T/B got in a property with no hassle. What is wrong with this concept? please feel free to tear it apart. All comments greatly appreciated. Would this be the same as an assignment?? Share this post Link to post Share on other sites
Guest Rat_Race_Hater(ImAnEagle) Report post Posted October 20, 2003 Howdy, I could be wrong but that sounds like a cooperative assignment to me. It is a means to closing a deal and creating a win-win-win situation for all 3 parties. The amount of money you receive is the actual option money from the T/B or you can even split that option money with the owner to make the deal more attractive. I guess the good thing is quick cash and even less risk for you,the investor and the not so good thing is that the seller(owner) would get the back end and monthly profits of the deal.I hope that helps. Rat Race Hater Share this post Link to post Share on other sites
MichaelC 160 Report post Posted October 20, 2003 What Rat_Race_Hater says is my take on it, also. It does sound like a Cooperative Assignment, but with an unnecessary twist thrown into the mix.I guess I don't understand why one would use a Pure Option with a clause of some kind, when you can do a CA as we have described here on many occasions. Share this post Link to post Share on other sites
Jason (AL) 1 Report post Posted October 21, 2003 Michael, I am not too familiar with your CAs.I understand the concepts, but when you're involved (personally) in the transaction, are you making lease payments to the seller until you find a T/B? Or do you make everything contingent on you finding a T/B first? ~Jason Share this post Link to post Share on other sites
MichaelC 160 Report post Posted October 21, 2003 It is contingent upon finding a tenant/buyer. The last thing you want is a homeowner's problem to become your's. Share this post Link to post Share on other sites
Jason (AL) 1 Report post Posted October 21, 2003 ...contingent on making lease payments to the seller until you find a T/B, Michael? Guess I shoulda been more specific. Share this post Link to post Share on other sites
Guest Rat_Race_Hater(ImAnEagle) Report post Posted October 21, 2003 hehe, yea, you want to make sure you have time to get your tennant buyer and then THEY actually make the payments. So whats happening is there is anywhere from 30 to 90 days time before the 1st monthly payment is due, but, It may not take that long to find your T/B...it is possible to find one in a few days with the proper marketing or same day if you have created a pool of potential T/Bs and have them on a waiting list. I have heard that finding T/Bs isnt the hardest part...I am a noobie investor and by far...the most difficult part of the process is finding a motivated seller and creating a deal...at least thats how I feel. It all can be done though and soon with ease...as long as you keep calling people and stay in the game...you will become more profecient and knowledgable with every owner you chat with...and that is my experience. RRH Share this post Link to post Share on other sites
MichaelC 160 Report post Posted October 21, 2003 Jason, what I am saying is that if you are doing a sandwich lease, it is set up so that you have ample marketing time to find a tenant/buyer. For example, if I do a deal now, mid October, I won't agree to a start up date any earlier than December 1. And that's only if I am completely confident I can move the property quickly. More than likely I'm going to be looking at a start date of January 1. And, if it's a high end property or a problematic property, then we're looking at February 1. It is imperative we make the homeowner understand the need for marketing time.In addition to ample marketing time, I have a cancellation clause in the agreement that allows me to cancel within an agreed to cancellation period. Thirty days, sixty days, whatever I can get from the homeowner. The bottom line is, done correctly, we should never find ourselves in the hole at the beginning of one of these sandwich deals.Now, if you're doing a Cooperative Assignment, you have even less risk. My agreement in these deals allows me to cancel at any time prior to the lease start date. The homeowner understands I am working with them trying to find a tenant/buyer. If for some reason I can't, it is understood I will not be on the hook for any monthly payments. Hope this makes it all clear.OK, boys and girls, I'm outta here. It's pushing 11:00PM ET, and I have a 5:00AM wake up call awaiting me. Off to the airport early in the morn for a trip to Poughkeepsie, NY. Back on Wednesday, late in the afternoon. Share this post Link to post Share on other sites
Jason (AL) 1 Report post Posted October 21, 2003 Thanks for your input RRH. Yes, I am well aware of getting that T/B as fast as possible.The reason I was asking that question was because I was wondering what Michael does personally.I assume he tries to get everything contingent on finding a T/B when structuring a sandwich-lease deal...as it should be. If you use the Straight Option with the clause, you aren't obligated to make lease payments to the seller.Granted, they need to be made...but not with my money Hence, the reason for using the Straight Option.But then again, you could make it to where you aren't obligated to lease payments if you chose to do so...which, obviously is the wise thing to do. I just didn't know if Michael told his seller that he (himself) wasn't responsible for lease payments until he found a T/B.From the looks of things, I assume he does. ~Jason Share this post Link to post Share on other sites
